What Is It? Is It Different from Other Chapter 7 Filings?
With limited exceptions, when you are struggling to meet your personal financial obligations, you have two potential paths to use American bankruptcy law to get a fresh start: liquidation or discharge of debt under Chapter 7 or restructuring/reorganization of debt through Chapter 13. Eligibility for Chapter 7, though, is not automatic. You must demonstrate to the court, by submitting to the “means test,” that you lack the resources to repay your creditors over a three-to-five-year period. If you don’t meet the provisions of the means test, your only recourse is through Chapter 13.
How Chapter 7 Typically Works
If you qualify to discharge debts under Chapter 7, you’ll be required to provide the court with an inventory of all property, assets, and obligations. You will also have to inform the court about financial transactions made over the past two years.
Once that inventory is submitted, the court will schedule a meeting of your creditors, which you must also attend. Any creditors who believe they have a claim against you must notify the court by filing a proof of claim. Any disagreements or disputes regarding a claim must then be resolved by the court. Once that process is complete, the court will grant the discharge of permissible debts in exchange for the transfer of all your non-exempt property to the bankruptcy trustee.
What Is a No-Asset Chapter 7 Bankruptcy and How Is It Different?
Statistics routinely confirm that the majority of Chapter 7 petitions involve debtors who have no property with any salvage value. There are simply no assets that can be sold to provide creditors with any financial relief.
In such cases, the court will notify creditors as soon as possible of the absence of any potential recovery. In a no-asset bankruptcy, the court may waive the scheduled meeting of creditors and typically won’t require creditors to submit proof of their claims.
Contact Attorney Howard N. Sobel
At the office of Howard N. Sobel, we provide personal bankruptcy counsel to people throughout the state of New Jersey. Contact our office online or call us at 856-424-6400 to set up a free initial consultation. Evening and weekend appointments can be arranged upon request. We accept all major credit cards.
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